Income Tax Appellate Tribunal - Jaipur
Deputy Commissioner Of Income Tax, ... vs M/S Jaipur Zila Dugdh Utpadak Sahkari ... on 30 September, 2019
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IN THE INCOME TAX APPELLATE TRIBUNAL,
JAIPUR BENCHES,"B" JAIPUR
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BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SINGH YADAV, AM
vk;dj vihy la-@ITA No. 22/JP/2019
fu/kZkj.k o"kZ@Assessment Year : 2014-15
M/s. Jaipur Zila Dugdh Utpadan Sahakari cuke The ACIT
Sangh Ltd. Jaipur Dairy Vs. Circle - 6
Near Gandhi Nagar Rly. Station, Jaipur Jaipur
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAAA0767G
vihykFkhZ@Appellant izR;FkhZ@Respondent
vk;dj vihy la-@ITA No. 187/JP/2019
fu/kZkj.k o"kZ@Assessment Year : 2014-15
The DCIT cuke M/s. Jaipur Zila Dugdh Utpadan
Circle - 6 Vs. Sahakari Sangh Ltd. Jaipur Dairy
Jaipur Near Gandhi Nagar Rly. Station, Jaipur
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAAA0767G
vihykFkhZ@Appellant izR;FkhZ@Respondent
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s Assessee by : Shri P.C. Parwal, CA
jktLo dh vksj ls@ Revenue by : Shri B.K. Gupta, (CIT)
lquokbZ dh rkjh[k@ Date of Hearing : 26/09/2019
mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 30 /09/2019
vkns'k@ ORDER
PER: SANDEEP GOSAIN, J.M. Both these appeals are the cross appeals filed against the order of CIT(A), Ajmer dated 20.11.2018 for the assessment year 2014-15 wherein the respective parties have raised following grounds.
ITA No. 22/JP/2019M/s. Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd vs ACIT, Circle - 6, Jaipur ITA No. 22/JP/2019 - Assessee ''1. The ld. CIT(A) has erred on facts and in law in holding that interest expenditure to the extent of Rs. 1,78,92,810/-is attributable to the interest income of Rs. 4,55,27,617/- earned on FDRs maintained with Jaipur Cooperative Bank Ltd., thereby disallowing deduction u/s 80P to this extent.
1.1 The ld. CIT(A) has erred on facts and in law in not considering that investment in FDRs is made out of own funds and borrowed funds has been utilized for business purpose and therefore, no interest can be attributed for earning the interest income.'' ITA No.187/JP/2019 - Revenue ''1. Whether in the facts and circumstances of the case and in law the ld. CIT(A) has erred in deleting the addition of Rs. 1,43,24,928/- on account of contribution made to ''Sparsh Trust'' without appreciating the fact that assessee failed to prove direct business nexus of the expenditure and it is not an allowable expenditure u/s 37(1) of the I.T. Act, 1961.
2. Whether in the facts and circumstances of the case and in law the ld. CIT(A) is correct in holding that the income received from investments made with Jaipur Central Cooperative Bank is eligible for deduction u/s 80P(2)(d) of the I.T. Act, 1961 and thereby justified in allowing relief of Rs. 2,76,34,807/-.'' 2.1 Brief facts of the case are that the assessee is a Cooperative Society which is engaged in the business of dealing of procurement of milk, processing to prepare its products and sale thereof. The assessee 2 ITA No. 22/JP/2019 M/s. Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd vs ACIT, Circle - 6, Jaipur filed its return of income declaring income of Rs. 7,6,30,810/- for the Assessment Year under consideration in the status of cooperative societies on 30-09-2014. Subsequently, the case of the assessee was selected for scrutiny and after serving statutory notices and seeking reply of the assessee the additions/ disallowances were made by the AO.
2.2 Aggrieved by the order of the AO, the assessee preferred an appeal before the ld. CIT(A) who after considering the case of both the parties, partly allowed the appeal filed by the assessee.
2.3 Now aggrieved by the order of the ld. CIT(A), the assessee as well as Revenue are in appeal before the Tribunal for redressal of their grievance.
2.4 During the course of hearing, the Bench noted that the assessee's ground 1 & 1.1 and the Revenue ground no. 2 mentioned hereunder are commonly interrelated and interconnected. Therefore, these grounds are disposed off by a common order for the sake of convenience and brevity of the case.
''1. The ld. CIT(A) has erred on facts and in law in holding that interest expenditure to the extent of Rs. 1,78,92,810/-is attributable to the interest income of Rs. 4,55,27,617/- earned on FDRs maintained with Jaipur 3 ITA No. 22/JP/2019 M/s. Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd vs ACIT, Circle - 6, Jaipur Cooperative Bank Ltd., thereby disallowing deduction u/s 80P to this extent.
1.1 The ld. CIT(A) has erred on facts and in law in not considering that investment in FDRs is made out of own funds and borrowed funds has been utilized for business purpose and therefore, no interest can be attributed for earning the interest income.''
2. Whether in the facts and circumstances of the case and in law the ld. CIT(A) is correct in holding that the income received from investments made with Jaipur Central Cooperative Bank is eligible for deduction u/s 80P(2)(d) of the I.T. Act, 1961 and thereby justified in allowing relief of Rs. 2,76,34,807/-.'' 2.5 At the outset of the hearing, the ld.AR of the assessee submitted that the Ground No. 1 & 1.1. of the assessee and Ground No. 2 of the Revenue raised in the respective appeals are squarely covered by the decision dated 2-09-2019 of Coordinate Bench in assessee's own case in ITA No.512 & 513/JP/2015 for the Assessment Year 2011-12- and 2012-13 and Revenue's appeal in ITA No. 633 & 634/JP/2019 for the Assessment Year 2011-12 and 2012-13 for which the ld.AR of the assessee relied on para 15 to 20 of the tribunal order as under:-
''15. Now, coming to a related issue as to whether by virtue of provisions of Section 80P(4) of the Act, the claim of the assessee under section 80(P)(2)(d) can be denied to the assessee society. The relevant provisions of section 80P(4) reads as under:4 ITA No. 22/JP/2019
M/s. Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd vs ACIT, Circle - 6, Jaipur "(4) The provisions of this section shall not apply in relation to any co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank."
16. The Coordinate Bench in case of Kaliandas Udyog Bhavan Premises Co-op Society Ltd. vs Income-tax Officer-21(2)(1), Mumbai [2018] 94 Taxmann.com 15 had an occasion to examine similar contention and it was held that though the co-operative bank pursuant to the insertion of Sub- section (4) of Sec. 80P would no more be entitled for claim of deduction under Sec. 80P of the Act, however, as a co-operative bank continues to be a co-operative society registered under the Co-operative Societies Act, 1912 (2 of 1912), or under any other law for the time being enforced in any state for the registration of co-operative societies, therefore, the interest income derived by a co-operative society from its investments held with a co-operative bank, would be entitled for claim of deduction under Sec.80P(2)(d) of the Act. We see no reason to deviate from the same and agree with the aforesaid view taken by the Co-ordinate Bench and. The relevant findings of the Co-ordinate Bench read as under:
"6. We have heard the authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record. We find that our indulgence in the present appeal has been sought to adjudicate as to whether the claim of the assessee for deduction under section 80P(2)(d), in respect of interest income earned from the investments made with the co- operative banks is in order or not. We find that the issue involved in the present appeal hinges around the adjudication of the scope and gamut of sub-section (4) of Sec. 80P, as had been made available on the statute by the legislature vide the Finance Act 2006, with effect from 01.04.2007. We find that the lower authorities had taken a view that pursuant to insertion of sub-section (4) of Sec. 80P, the assessee would no more be entitled for claim of deduction under Sec. 80P(2)(d) of the interest income earned on the amounts parked as investments with co-5 ITA No. 22/JP/2019
M/s. Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd vs ACIT, Circle - 6, Jaipur operative banks, other than a Primary Agricultural Credit Society or a Primary Co-operative Agricultural and Rural Development Bank. We find that the lower authorities had observed that as the co-operative bank with which the surplus funds of the assessee were parked as investments, were neither Primary Agricultural Credit Society nor a Primary Co-operative Agricultural and Rural Development Bank, therefore, the interest income earned on such investments would not be entitled for claim of deduction under Sec. 80P(2)(d) of the Act.
7. We have deliberated at length on the issue under consideration and are unable to persuade ourselves to be in agreement with the view taken by the lower authorities. Before proceeding further, we may herein reproduce the relevant extract of the said statutory provision, viz. Sec. 80P(2)(d), as the same would have a strong bearing on the adjudication of the issue before us.
"80P(2)(d) (1) Where in the case of an assessee being a co-operative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in sub-section (2), in computing the total income of the assessee.
(2) The sums referred to in sub-section (1) shall be the following, namely :--
(a) to (c)** ** **
(d) in respect of any income by way of interest or dividends derived by the co-operative society from its investments with any other co-operative society, the whole of such income;"
Thus, from a perusal of the aforesaid Sec. 80P(2)(d) it can safely be gathered that income by way of interest income derived by an assessee co-operative society from its 6 ITA No. 22/JP/2019 M/s. Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd vs ACIT, Circle - 6, Jaipur investments held with any other cooperative society, shall be deducted in computing the total income of the assessee. We may herein observe, that what is relevant for claim of deduction under Sec. 80P(2)(d) is that the interest income should have been derived from the investments made by the assessee co-operative society with any other cooperative society. We though are in agreement with the observations of the lower authorities that with the insertion of Sub-section (4) of Sec. 80P, vide the Finance Act, 2006, with effect from 01.04.2007, the provisions of Sec. 80P would no more be applicable in relation to any co-operative bank, other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank, but however, are unable to subscribe to their view that the same shall also jeopardise the claim of deduction of a co-operative society under Sec. 80P(2)(d) in respect of the interest income on their investments parked with a co- operative bank. We have given a thoughtful consideration to the issue before us and are of the considered view that as long as it is proved that the interest income is being derived by a co-operative society from its investments made with any other co-operative society, the claim of deduction under the aforesaid statutory provision, viz. Sec. 80P(2)(d) would be duly available. We may herein observe that the term 'co-operative society' had been defined under Sec. 2(19) of the Act, as under:--
'(19) "Co-operative society" means a cooperative society registered under the Co-operative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any state for the registration of co-operative societies;' We are of the considered view, that though the co-
operative bank pursuant to the insertion of Sub-section (4) of Sec. 80P would no more be entitled for claim of deduction under Sec. 80P of the Act, but however, as a co- operative bank continues to be a co-operative society registered under the Co-operative Societies Act, 1912 (2 of 7 ITA No. 22/JP/2019 M/s. Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd vs ACIT, Circle - 6, Jaipur 1912), or under any other law for the time being enforced in any state for the registration of co-operative societies, therefore, the interest income derived by a co-operative society from its investments held with a co-operative bank, would be entitled for claim of deduction under Sec.80P(2)(d) of the Act.
8. We shall now advert to the judicial pronouncements that had been relied upon by the authorized representatives for both the parties and the lower authorities. We find that the issue that a co-operative society would be entitled for claim of deduction under Sec. 80P(2)(d) for the interest income derived from its investments held with a cooperative bank is covered in favour of the assessee in the following cases:
(i) Land and Cooperative Housing Society Ltd. (supra)
(ii) Sea Green Cooperative Housing and Society Ltd. (supra)
(iii) Marwanjee Cama Park Cooperative Housing Society Ltd. (supra).
We further find that the Hon'ble High Court of Karnataka in the case of Totagars Cooperative Sale Society(supra) and Hon'ble High Court of Gujarat in the case of State Bank Of India (supra), had also held that the interest income earned by the assessee on its investments held with a co- operative bank would be eligible for claim of deduction under Sec. 80P(2)(d) of the Act. Still further, we find that the CBDT Circular No. 14, dated 28.12.2006, as had been relied upon by the ld. A.R, also makes it clear beyond any scope of doubt, that the purpose behind enactment of sub- section (4) of Sec. 80P was to provide that the co-operative banks which are functioning at par with other banks would no more be entitled for claim of deduction under Sec. 80P(4) of the Act. We are of the considered view that the reliance placed by the CIT (A) on the judgment of the Hon'ble Supreme Court in the case of Totgars Co-operative Sale Society Ltd. (supra) being distinguishable on facts, thus, had wrongly been relied upon by him. The 8 ITA No. 22/JP/2019 M/s. Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd vs ACIT, Circle - 6, Jaipur adjudication by the Hon'ble Apex Court in the aforesaid case was in context of Sec. 80P(2)(a)(i), and not on the entitlement of a co-operative society towards deduction under Sec. 80P(2)(d) on the interest income on the investments parked with a co-operative bank. We further find that the reliance place by the ld. D.R on the order of the ITAT "F" bench, Mumbai in the case of Vaibhav Cooperative Credit Society (supra) is also distinguishable on facts. We find that the said order was passed by the Tribunal in context of adjudication of the entitlement of the assessee co-operative bank towards claim of deduction under Sec.80P(2)(a)(i) of the Act. We find that it was in the backdrop of the aforesaid facts that the Tribunal after carrying out a conjoint reading of Sec. 80P(2)(a)(i) r.w. Sec. 80P(4) had adjudicated the issue before them. We are afraid that the reliance placed by the ld. D.R on the aforesaid order of the Tribunal being distinguishable on facts, thus, would be of no assistance for adjudication of the issue before us. Still further, the reliance placed by the Ld. D.R on the order of the ITAT 'SMC' Bench, Mumbai in the case of Shri Sai Datta Co-operative Credit Society Ltd. (supra), would also not be of any assistance, for the reason that in the said matter the Tribunal had set aside the issue to the file of the assessing officer for fresh examination. That as regards the reliance placed by the ld. D.R on the judgment of the Hon'ble High Court of Karnataka in the case of Totagars co-operative Sale Society (supra), the High Court had concluded that a co- operative society would not be entitled to claim of deduction under Sec. 80P(2)(d). We however find that as held by the Hon'ble High Court of Bombay in the case of K. Subramanian v. Siemens India Ltd. [1983] 15 Taxman 594/[1985] 156 ITR 11 (Bom), where there is a conflict between the decisions of non-jurisdictional High Court's, then a view which is in favour of the assessee is to be preferred as against that taken against him. Thus, taking support from the aforesaid judicial pronouncement of the Hon'ble High Court of jurisdiction, we respectfully follow the view taken by the Hon'ble High Court of Karnataka in 9 ITA No. 22/JP/2019 M/s. Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd vs ACIT, Circle - 6, Jaipur the case of Totagars Cooperative Sale Society(supra) and Hon'ble High Court of Gujarat in the case of State Bank Of India (supra), wherein it was observed that the interest income earned by a co-operative society on its investments held with a co-operative bank would be eligible for claim of deduction under Sec.80P(2)(d) of the Act.
9. We thus in the backdrop of our aforesaid observations are unable to persuade ourselves to be in agreement with the view taken by the lower authorities that the assessee would not be entitled for claim of deduction under Sec. 80P(2)(d), in respect of the interest income on the investments made with the co-operative bank. We thus set aside the order of the lower authorities and conclude that the interest income of Rs. 27,48,553/-earned by the assessee on the investments held with the co-operative bank would be entitled for claim of deduction under Sec. 80P(2)(d).
17. In light of above, by virtue of provisions of Section 80P(4) of the Act, the claim of the assessee under section 80(P)(2)(d) cannot be denied to the assessee society.
18. Another issue that arise for consideration is whether deduction u/s 80P(2)(d) shall be allowed on the gross interest income on FDRs or it should be allowed on the net interest income calculated after deducting the interest expenditure allocable to funds placed in form of FDR. Though the assessee has challenged the findings of the ld CIT(A) to the effect that it has not incurred any interest expenditure, we find that there is no necessity to examine the same as conceptually, the deduction under section 80P(2)(d) has to be allowed on gross and not on net interest income as held by the Hon'ble Gujarat High Court in case of Surat Vankar Sahakari Sangh Ltd vs ACIT [2016] 72 Taxmann.com 169 (Guj) wherein it was held as under:
10 ITA No. 22/JP/2019M/s. Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd vs ACIT, Circle - 6, Jaipur "3. In all the four appeals, the common issue is grant of net deduction u/s 80P(2)(d) of the Act, in respect of interest and dividend received by the assessee from co-
operative societies i.e. bank in this case. The Assessing Officer allowed deduction u/s 80P(2)(d) to the extent of net interest instead of gross interest as claimed by the assessee and disallowed the excess claim of deduction in this regard for all the years under consideration. The amount disallowed by the Assessing Officer and deduction granted by the Assessing Officer is tabularized and recorded as under:
Particular Assessment Years
1991-92 1992-93 1993-94 1994-95
Dividend - From co- op
9743 48000 3491 42674
societies
Interest (As shown in the
1022699 1214259 1220756 902765
return of income)
Deduction u/s 80P(2)(d) of
1027719 1045298 1223026 943736
the Act as per return
Disallowed by Assessing
477863 640219 641273 76116
Officer
Deduction granted u/s
80P(2)(d) of the Act by 549856 405079 581753 867618
Assessing Officer
8. We have considered the decisions cited by learned advocate for the assessee as well as the revenue. We feel that the decisions cited by the learned advocate for the assessee shall be applicable on the facts of the present case. In the case of K. Nandakumar v. ITO [1993] 204 ITR 856/[1994] 72 Taxman 223 (Ker.), the Kerala High Court has held as under:
'4. The effect of Section 80AB is that, for the purpose of computing the deduction under Section 80L, the amount of income of that nature as computed in accordance with the provisions of the Act shall alone be deemed to be the 11 ITA No. 22/JP/2019 M/s. Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd vs ACIT, Circle - 6, Jaipur amount of income of that nature. What the section means is that the net income by way of interest computed in the manner provided by the provisions of the Act shall alone be taken into account for computing the benefit. But it must be noted that payment of interest under a loan transaction incurred for the purpose of deriving income from business is not an item which arises in the computation of interest income "in accordance with the provisions" of the Act. The said amount has to be paid irrespective of whether any interest income is otherwise received or not. Though the interest is payable to the same bank, the fact remains that the amount of income by-way of interest is not calculated under the provisions of the Act with reference to such outgoings which fall under different heads. The assessee is entitled to deduction under Section 37 of all expenditure incurred for the purpose of deriving the business income, and it is under that head that the interest paid on the loan taken from the bank is deducted. The net amount of interest contemplated by Section 80AB should take in the net amount arrived at after meeting the expenses deductible from that item under the provisions of the Act as explained above. That is not the case here. Therefore, Section 80AB has no application to the facts of these cases. The interest paid on the loan transactions has to be deducted from the business income, and not from the interest received from the bank on the fixed deposits. The assessees were therefore right in the submissions which they made before the Commissioner of Income-tax in the revision petitions which they filed. This aspect of the matter has been overlooked by the Commissioner in passing the order, exhibit P-5.' 8.1 Similarly, in the case of Doaba Co-operative Sugar Mills Ltd (supra), the Punjab & Haryana High Court has held as under:
'5. The contention of Mr. Gupta, learned counsel appearing for the Revenue, is that the Tribunal was wrong 12 ITA No. 22/JP/2019 M/s. Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd vs ACIT, Circle - 6, Jaipur in allowing deduction under Section 80P(2) (d) of the Act because it is not established that the assessee had derived the interest by investing all the amount of surplus funds. It is further contended by Mr. Gupta that the assessee has paid interest to Jalandhar Central Co-operative Bank and has also received interest from the said co- operative bank, thereby showing that the assessee has on the aggregate paid interest to the bank and, therefore, no deduction under Section 80P(2)(d) can be allowed. To appreciate this argument, we have to look to the provisions of Section 80P(2)(d) of the Act, For facility of reference, it is reproduced as under :
"80P. (2)(d) in respect of any income by way of interest or dividends derived by the co-operative society from its investments with any other co- operative society, the whole of such income."
6. So far as the principle of interpretation applicable to a taxing statute is concerned, we can do no better than to quote the by-now classic words of Rowlatt J., in Cape Brandy Syndicate v. IRC [1921] 1 KB 64, 71 :
"...In a taxing Act, one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used,"
7. The principle laid down by Rowlatt J., has also been time and again approved and applied by the Supreme Court in different cases including the one, Hansraj Gordhandas v. H. H. Dave, Assistant Collector of Central Excise and Customs, AIR 1970 SC 755, 759.
8. Section 80P(2)(d) of the Act allows whole deduction of an income by way of interest or dividends derived by the 13 ITA No. 22/JP/2019 M/s. Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd vs ACIT, Circle - 6, Jaipur co-operative society from its investment with any other co- operative society. This provision does not make any distinction in regard to source of the investment because this Section envisages deduction in respect of any income derived by the co-operative society from any investment with a co-operative society. It is immaterial whether any interest paid to the co- operative society exceeds the interest received from the bank on investments. The Revenue is not required to look to the nature of the investment whether it was from its surplus funds or otherwise. The Act does not speak of any adjustment as sought to be made out by learned counsel for the Revenue. The provision does not indicate any such adjustment in regard to interest derived from the co-operative society from its investment in any other co-operative society. Therefore, we do not agree with the argument advanced by learned counsel for the Revenue. In our opinion, the learned Tribunal was right in law in allowing deduction under Section 80P(2)(d) of the Income- tax Act, 1961. in respect of interest of RS. 4,00,919 on account of interest received from Nawanshaln Central Co-operative Bank without adjusting the interest paid to the hank. Therefore, the reference is answered against the Revenue in the affirmative and in favour of the assessee.' 8.2 Moreover, the Bombay High Court in the case of Bai Bhuriben Lallubhai (supra) has held that the purpose for which the assessee borrowed money had no connection whether direct or indirect with the income which she earned from the fixed deposit and that she was not entitled to the deduction claimed under Section 12(2). The High Court held that if an assessee had no option except to incur an expenditure in order to make the earning of an income possible, then undoubtedly the exercise of that option is compulsory and any expenditure incurred by reason of the exercise of that option would come within the ambit of section 12(2) of the Indian Income-Tax Act but where the option has no connection with the carrying on of the business or the earning of the income and the option 14 ITA No. 22/JP/2019 M/s. Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd vs ACIT, Circle - 6, Jaipur depends upon personal considerations or upon motives of the assessee, that expenditure cannot possibly come within the ambit of Section 12(2). In the present case, the loan was taken for business purpose more particularly purchase of yarn and not for fixed deposits.
9. In view of the above, the questions raised in the present appeals are answered in favour of the assessee and against the revenue. The order passed by the Tribunal is accordingly quashed and set aside."
19. In light of above discussion and respectfully following the decisions referred supra, the assessee society is held eligible for deduction under section 80P(2)(d) in case of interest income of Rs 1,49,40,834 on FDRs placed with Jaipur Central Cooperative Bank Ltd.
20. In the result, the sole ground of Revenue's appeal is dismissed and ground no. 2 in assessee's cross appeal is allowed. Having decided the matter on merits, the legal ground raised by the assessee challenging the validity of the proceedings u/s 147 has become infructous and is dismissed.'' 2.6 During the course of hearing, the ld. DR supported the order of the AO and also filed following case laws to this effect.
1. PCIT vs Toagars Cooperative Sale Society [2017] taxmann.com 140 (Karnataka)
2. CIT vs Rajasthan Rajya Sahakari Upbhokta Sangh Ltd [1996) 84 taxman 33 (Raj).
2.7 We have heard the rival contentions and perused the materials available on record. The Bench has also taken into consideration the 15 ITA No. 22/JP/2019 M/s. Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd vs ACIT, Circle - 6, Jaipur judgement cited by the Revenue authorities. However, the Bench noted that recent judgment on the particular issue has already been pronounced by the ITAT Coordinate Bench vide its order dated 02-8-2019 in the assessee's own case. Therefore, respectfully following the decision of the ITAT Coordinate Bench in assessee's own case (supra), on the issue in question, we allow the Ground No. 1 and 1.1 of the assessee and dismiss the Ground No. 2 of the Revenue.
3.1 Now we take up the Ground No. 1 of the Revenue wherein the Revenue is aggrieved that the ld. CIT(A) has erred in allowing the claim of deduction for contribution made to 'Sparsh Trust' of Rs.
1,43,24,928/-.
3.2 At the outset of the hearing, the ld.AR of the assessee submitted that the issue in question is covered and it has already been decided on 15-06-2016 by the Coordinate Bench in assessee's own case in ITA No. 1003/JP/2015 for the Assessment Year 2012-12.
3.3 On the other hand, the ld. DR supported the order of the AO.
3.4 We have heard the rival contentions and perused the materials available on record. It is not imperative repeat the facts of the issue in question as similar issue has already been decided on 15-06-2016 by 16 ITA No. 22/JP/2019 M/s. Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd vs ACIT, Circle - 6, Jaipur the Coordinate Bench in ITA No. 1003/JP/2015 vide its para 2.4 to 2.5 as under:-
'' 2.4 The Coordinate Bench vide its order dt. 15.03.2012 in ITA No. 820/JP/11 for A.Y. 08-09 has given its findings as under:
"After considering the submissions, orders of the authorities below, we find that assessee deserve to succeed in its ground raised. It is noticed that before creating SPARSH, the assessee was doing all these expenditure itself. Just for betterment of administration services, the assessee created the Trust through whom these expenses are incurred. The Profit & Loss account of the Trust is maintained, copy of which is placed in the compilation and it is seen that whatever amount has been given by assessee or reimbursed by assessee, that has been spent by the trust on the animals to get better quality and quantity of milk. The assessee has contributed @ Rs.0.05 per litre of milk procured to its trust for the purpose of incurring expenditure for better quality of milk. An agenda note was prepared which clearly states that the purpose of contribution is for medical and health facility of the animals of the milk producers at the District level. The contribution made by assessee to trust is thus directly linked with the procurement of better quality, hygienic and more quantity of the milk. It is in the interest of the assessee that the milk animals at the village level from where it procures the milk are healthy and for this purpose, SPARSH Trust incurred expenditure in providing vaternity care, regular treatment, emergency care, preventive care, breed improvement through A.I. uninterrupted supply of nutritional supplement etc. Therefore, in our considered view, contribution made by assessee to this trust is an expenditure incurred wholly and exclusively for the purpose of business which is allowable u/s 37(1). From the income and expenditure account of the trust, it can be noted that it 17 ITA No. 22/JP/2019 M/s. Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd vs ACIT, Circle - 6, Jaipur has incurred an expenditure in pursuance of its objectives and after considering the receipts, there is deficit to the trust in the year under consideration. Such deficit is met out of the contribution made by assessee to the Trust. It is further seen that before creating this trust, the assessee was incurring all these expenses itself and all these expenses were allowed by the department while completing assessment u/s 143(3).Therefore, this is not a case that assessee has made donation to any trust and, therefore, the same cannot be allowed as business expenditure. The Id. CIT (A) has disallowed the claim of assessee by observing that since assessee has made donation u/s 80G and, therefore, deduction u/s 80G is allowable whereas the facts are otherwise. The assessee has not made any donation but has contributed to the trust for a specific purpose i.e. to incur the expenditure to get better milk from milk animal. Various case laws relied upon by the assessee are in support of the case of the assessee. We are not getting into details in respect of those cases as they have already been mentioned in the written submissions which are reproduced herein above. In view of these facts and circumstances, we hold that the expenditure/contribution made by assessee is allowable as business expenditure. Accordingly, the addition made and confirmed by lower authorities is deleted."
2.5 Similar orders were passed by the Tribunal for the assessment year 2009- 10 and 2010-11. There is no change of circumstances brought to our notice after passing of the orders referred hereinabove or no change in law has been brought to our notice by either of parties. We have heard the rival contentions and perused the material available on record. The issue in question is covered in favour of the assessee by the earlier decisions of the Coordinate Benches in assessee's own case. Respectfully following the earlier decisions of the Coordinate Benches, the contribution of Rs. 1,23,63,091/- made by the assessee to SPARSH Trust is accordingly allowed as an eligible business expenditure under section 37(1) of the Act. Thus, the ground raised by the Revenue is dismissed. '' 18 ITA No. 22/JP/2019 M/s. Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd vs ACIT, Circle - 6, Jaipur 3.5 Respectfully following the decision of the Coordinate Bench in the above case, we find that the issue in question is covered by the above decision dated 15-06-2016 of ITAT Coordinate Bench. Hence, the Ground No. Ground No. 1 of the Revenue is dismissed.
3.0 In the result, the appeal filed by the assessee is allowed and that of the Revenue is dismissed with no order as to cost.
Order pronounced in the open court on 30/09/2019.
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(Vikram Singh Yadav) (Sandeep Gosain)
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Tk;iqj@Jaipur
fnukad@Dated:- 30 /09/2019.
*Mishra
vkns'k dh izfrfyfi vxzfs 'kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- M/s. Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd, Jaipur
2. izR;FkhZ@ The Respondent-The ACIT, Circle - 6, Jaipur
3. vk;dj vk;qDr@ CIT
4. vk;dj vk;qDr@ CIT(A)
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur.
6. xkMZ QkbZy@ Guard File {ITA No. 22/JP/2019} vkns'kkuqlkj@ By order, lgk;d iathdkj@Asstt. Registrar 19